BP sees US oil production rising at record pace

In its world energy review, BP revealed that 2012 had the largest single-year increase ever seen in the US, largely from unconventional hydrocarbons such as tight oil. This illustrates an example of the increasing diversity of energy sources as the global market continues to adapt and evolve.

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The
year 2012 included the largest single-year
increase in US oil production ever recorded, offering new
evidence of the flexibility of the worlds energy system
in meeting rapid global change, BP officials said
Wednesday.

The US recorded the worlds highest growth in production
of both oil and natural gas in 2012, on the back of increasing
production of unconventional hydrocarbons such as tight oil,
the company said.

This illustrates an example of the increasing
diversity of energy sources as the global market continues to
adapt, innovate and evolve, according to BP officials. With
rising natural gas output driving prices lower in the US,
natural gas displaced coal in power generation, causing the US
to experience the largest decline of coal consumption in the
world.

Market changes outside the US

Elsewhere, 2012 saw the largest annual decline in world nuclear
output, BP reported. In Japan, where nuclear power generation
all but disappeared after 2011s Fukushima accident,
higher imports of fossil fuels including liquefied natural gas
(LNG) kept the lights on.

In Europe, where gas prices were higher
than in the US, power generators took the opposite course from
the US, and substituted coal for gas.

For those of us in the energy industry, the challenges
are about how we respond to the big shifts we are
seeing -- a shift in demand towards emerging economies and
a shift in supply towards a greater diversity of energy
sources, including unconventionals, said Bob Dudley, BP
chief executive.

The data show there is ample energy available. Our
challenge as an industry is to make the best choices about
where to invest. We want to provide energy in ways that enable
us to be both safe and competitive -- deploying our
strengths while reducing our risks, and managing our
costs.

Decline in total energy consumption growth

The review also revealed a drop in the growth of
overall global energy consumption to 1.8% in 2012, down from
2.4% the previous year. This was partly as a result of the
economic slowdown, but also because individuals and businesses
responded to high prices by becoming more efficient in their
use of energy.

The emerging economies, meaning the non-OECD countries,
firmly established themselves as the source of what demand
growth was seen, with China and India alone accounting for nearly
90% of the increase. Just 20 years ago, the emerging
economies accounted for only 42% of global consumption; now
that figure is 56%.

Record production in Middle East countries

For a second consecutive year, oil supply disruptions in
Africa and the Middle East were offset by growth among other
Middle East producers, with record oil production in Saudi
Arabia, the UAE, and Qatar. Despite these supply increases,
average nominal oil prices reached another record high.

Coal remained the fastest-growing fossil fuel, with China
now consuming the majority of the worlds coal for the
first timebut it was also the fossil fuel that saw the
weakest growth relative to its historical average.

Hydroelectric and renewable energy (along with cheap natural
gas in North America) competed against coal in power
generation. Global biofuels output fell for the first
time since 2000 due to weakness in the US, but renewables in
power generation grew by 15.2% and accounted for a record 4.7%
of global power output.

Global carbon dioxide (CO2) emissions from energy use continued
to grow in 2012, but at a slower rate than in 2011. Lower coal
use helped the US reduce its emissions of carbon dioxide to 1994 levels, and
EU emissions declined despite coal
gaining market share from natural gas in power generation.

2012 was yet another year of adaptation to a changing
energy landscape, said Christof Rühl, BPs
chief economist. As the non-OECD economies industrialize,
they unlock ever more resources. The data tell us that the
industrializing part of the world not only outpaces the OECD in
terms of proved reserves growth, it also contributes its fair
share to energy production.